Eagle’s Liz Blake, who will be speaking at ENGAGE18, highlights why forward-thinking asset managers are abandoning an “incremental” approach to data management

Q: Most asset managers have been affected by significant shifts that have occurred across the industry landscape, including the rotation into passive strategies and its impact on fees, the growing regulatory burden, and, of course, the pace of technological change. How have you seen firms deal with these challenges as it relates to their approach to data management?

A: Firms typically pursue one of two possible paths. You have the data “incrementalists,” who are focused on the immediate challenge and are not necessarily looking at the whole picture. They tend to be far more focused on the production and maintenance of data rather than analyzing it. Ultimately, this speaks to the amount of value that the broader organization receives from the data management function. Most financial organizations, before now, have resisted more comprehensive transformations because the evolving backdrop has created a moving target. But given the insatiable demand for data today—driven by growth in the volume, varieties and velocity of data—many organizations are at a point where they need to transform their data management function or fall behind. Otherwise, they may struggle to accommodate AUM growth, launch new products, or even expand into new markets. Organizations today can no longer solve the data explosion by simply adding bodies or by sticking new technology onto old systems. Taking a reactive, piecemeal approach may solve each challenge as it arises and can help delay big decisions, but it comes at the expense of adding more technology debt, creating a more complex operating model, and introducing greater operational risk.

Then you have the true data visionaries, who are willing to step back and reconsider how their organization is positioned to meet new challenges. Those who fit into this category recognize the consequences of poor data quality. And they’re willing to reimagine a more revolutionary, data-inspired operating model that goes beyond simply meeting an immediate need to materially enhance the value of desired outcomes.

Q: That’s interesting. So how do you characterize those firms that would be considered a data visionary?

A: There is no one-size-fits-all characterization, but true data visionaries recognize that the consumption model of their organization is changing or has already changed. They’re going to holistically reimagine the data management function to ensure the right people are providing the right information at the right time. They lean toward streamlined processes that reduce errors and minimize information delivery times. And, rather than pursuing complex and costly implementations, they’re generally simplifying their organization’s technology footprint and deployment model through expandable data systems that utilize the cloud.

Again, every organization takes a different approach, but I’ve found that the more forward-thinking asset managers have embraced managed services. It allows them to remain plugged into emerging technologies, such as robotics and agile deployment models, but without the headaches of navigating a legacy-system replacement every ten years. They can also benefit from specialized expertise at scale and leverage a vendor’s global presence to facilitate a 24/7, follow-the-sun operating model. Effectively, data visionaries recognize data management as a true specialized skillset that, today, really requires dedicated resources to deliver “differentiated” functionality across the enterprise.

Q: In your estimation, what is preventing asset managers today from pursuing this more forward-thinking approach?

A: I think more and more asset managers actually do recognize the need to do something different. At our last ENGAGE client conference, for instance, I cited research forecasting that by 2019, approximately one fifth of the industry’s collective technology spend would shift to managed services. Based on the number of RFPs I’m seeing and the constructive conversations we’re having with COOs, many acknowledge the need to rethink their approach.

But one of factors that likely stands in the way of more asset managers embracing managed services is the inability to truly measure data quality. They may recognize that there are problems around the timeliness and veracity of data, but if they understood the extent of the problem there would certainly be more urgency.

There is also a tendency to fall into the “sunk cost” trap, whether it’s a reluctance to move on from past investments in either existing technology or even people. But that stems from a misperception about managed services; we don’t necessarily replace an organization’s current capabilities, wholesale. But we can help maximize the in-house resources that are already in place through applying a specialized skillset and new technological capabilities to instill a true data foundation.

Organizations can then begin to realize data as a true business asset and make it actionable through enhanced client reporting, timely front-office insights, evidence-based decision-making, and effective risk management. And all of this ensures asset managers are optimizing their overall data spend, while directing excess capacity and resources to other areas—core competencies that better reflect their value proposition in an increasingly competitive market.

Liz Blake will present, “Eagle Managed Services: A Visionary Approach to Data Challenges”, at ENGAGE18, taking place at the Boca Raton Resort and Club, Florida, between 22-25 April, 2018. For more information, visit: www.eagleengage.com